What are the Benefits of Going Offshore for Expats?

Exploring and explaining the very real and straightforward reasons why expatriates should explore their offshore options

If you’re just starting out on your journey abroad and beginning a new life overseas as an expat, chances are you will not yet be necessarily well-versed in the advantages of ‘offshoring’ your finances.  After all, when you live onshore you’re almost indoctrinated against putting money offshore by your own government.

In part this is because your government needs to keep reminding you of your reporting obligations when it comes to taxation – and in part it is simply because they prefer your money and assets to be onshore where they can keep an eye on them!  However, when you move abroad, naturally all of this changes – and it changes very much for the better.

When you leave your old home nation behind and start on a new path abroad, your entire tax status changes and this can have a positive and beneficial impact on your wealth.  It is at this point that the concept of ‘offshore’ - when it comes to your fiscal status - needs to be explored.  So, what are the benefits of going offshore for expats?  Allow us to explain and guide you through the very straightforward ways in which you could actually be enhancing your fiscal status by going offshore.

Offshore Banking for Expatriates

When we live onshore we take our banking needs and the solutions in place to meet those needs very much for granted usually.  Most of the time we have an account that we manage online or on the phone, we’ve had it at least since our student days and it is a very simple account structure that just works!  When we move abroad however, we soon discover that our old bank account may not be serving us very well at all.  Think about it, you’re living abroad, possibly earning in a different currency, your company wants to pay you your salary into a more local account, you need to withdraw cash from an ATM without charges or hand over plastic to pay for goods and services and your old onshore account becomes totally useless!

So, do you simply replace your old onshore account with the same in your new country?  Well you certainly can as it can make things very easy for you in terms of the day to day management of your affairs – but then do you want or need to remit all of your ‘cash’ into your new nation when you don’t have to?  There may be tax reasons not to, there many be political reasons not to, there may be economic or security reasons not to…

Added to this is the fact that a new onshore account in your new nation may be as equally inflexible as your old onshore account in your old country of residence!  It is for this reason that the vast majority of expatriates choose to have an offshore – or perhaps more accurately named – international account.

An international bank account for an expatriate is almost an essential item!  It allows you the safe, secure and private management of your money no matter where in the world you are, no matter which currency you’re paid in and pay out in, and it is the embodiment of flexibility.  Such an account is available in a ‘plain vanilla’ form from all the leading banks - from Halifax International to HSBC for example – and you just have to find the solution that suits you best.  For example, at the moment HSBC are offering incentives to get you to sign up to their account such as providing you with competitive interest rates, whilst Halifax International are attracting customers with bonus rates of interest for a fixed period.

An expatriate seeking the best offshore/international banking solution just has to do some legwork in terms of comparing and contrasting the products and services on the market.  Having done so, they will hopefully find they have the most flexible banking solution for the management of their cash when they open their offshore bank account.

Offshore Saving and Investing for Expatriates

There are very real taxation beneficial reasons to save and invest offshore if you’re an expatriate in the majority of cases.  Having said that, each individual’s situation has to be assessed on a case by case basis – and what might be the perfect offshore investment solution for me could prove disastrous for you!  You see, whilst simply saving money offshore as an expat can mean you earn all your interest without the deduction of taxation at source, you will have reporting and taxation requirements depending on where you live, are tax resident, are saving and where you remit the money to at the end of an account’s term for example.  So, someone who earns their interest without the deduction of taxation at source may never have to pay tax on that money, whereas someone else will have to but on a yearly basis for example.  I.e., you have to know the appropriateness of a given offshore saving or investment solution for you.  To that end, you need to explore all the options that are available with the assistance of a professional adviser.

There is so much choice in terms of everything from simple offshore savings solutions to complex international portfolio structures that an expatriate can theoretically benefit from.  And aside from the taxation benefits that some people can really enjoy, there are a million other reasons to save and invest offshore.  For example you can choose the currency you want to invest in, you have more choice about where and in what you invest, you have more choice of fund managers, a greater range of accounts and investment types.  There are a myriad of structures you can choose from for the management and investment of your wealth – and all in all, as an expatriate you have a very real advantage over your peers back home in terms of using your offshore opportunity to enhance your wealth status.

Work with a professional, regulated, experienced and qualified independent expatriate financial adviser to find the right solution for you.

Offshore Wealth Management Expatriates

As discussed in an article yesterday entitled expatriate wealth management, expats need to understand that when it comes to the protection and enhancement of their wealth, there are a number of elements that have to come in to the equation.  These include insurances, appropriate tax advice, saving, investing and banking – and none of these elements should be looked at as a stand alone issue.  To ensure the protection and enhancement of your fiscal status today, tomorrow, into the future and beyond, you need to take an holistic overview when it comes to your money!

In other words, as an expat you have a massive advantage – but you have to make sure you take and protect that advantage by making sure you do the very best for your money.  You have to make sure you’re not paying more tax than you should – but at the same time you need to understand your reporting requirements.  You need to know that there are short, medium and long-term aspects when it comes to saving your wealth.  Ultimately, it comes down to the fact that as an expat you have an advantage and you need to seek whatever assistance it takes to make sure you make the most of this advantage.

The first step in the process is understanding the unique position you’re in, the second step is going out there and harnessing whatever assistance you need to make the very most of your money whilst preserving and protecting your fiscal status.